Auto stocks came under heavy selling pressure after September sales data disappointed investors, with the Nifty Auto index falling over 4% and making it the worst-performing sectoral index. Bajaj Auto's shares plunged nearly 7% on disappointing domestic two-wheeler sales, while Mahindra & Mahindra shares fell nearly 4% as September sales fell short of analyst estimates. The Nifty Auto index underperformed all other sectoral indices, with all components of the Nifty Auto Index trading in the red during intra-day trade. The sharp decline was primarily driven by weak domestic sales performance across major automakers, with auto sales ahead of the festive season often seen as a yardstick of consumer sentiment. The lower tractor sales are seen as a cause of concern with regard to rural demand, adding to sectoral concerns.
Mahindra & Mahindra shares fell nearly 4% as September sales came in at 114,874 units, falling short of analyst estimates despite posting 15% year-on-year growth. The company's domestic tractor sales in September came in at 50,208 units, a 23% year-on-year degrowth from 64,946 units in September 2025. However, total vehicle sales for September rose 15% year-on-year, with domestic utility vehicle sales up 14% YoY at 64,092 units and domestic CV sales rising 14% to 30,420 units. The company's trucks and buses business recorded strong growth, with sales including exports rising 53% YoY to 2,912 units, attributed to early festive buying, continued infrastructure activity and steady freight movement. Maruti Suzuki shares plunged 5% as total vehicle sales for September soared 24% YoY to 236,013 units, with domestic vehicle sales rising 30% to 191,794 units. Tata Motors PV share price was under pressure as total sales rose 15% YoY to 70,210 units, led by domestic sales of 68,810 units.
Bajaj Auto shares saw the biggest decline, plunging nearly 7% during the session, marking the stock's steepest single-day decline in two years, after the company fell short of its 570,000-unit September target by approximately 40,000 vehicles. According to Joint Managing Director Rakesh Sharma, the deficit was entirely driven by component shortages and shipping bottlenecks rather than any underlying weakness in demand. Half of the 40,000-unit shortfall occurred in the Chetak electric vehicle lineup, where delayed component shipments capped production at 42,000 units against a planned output of more than 60,000. However, with supply bottlenecks resolved in recent days, the company anticipates manufacturing 62,000 Chetak units in October to meet demand that currently exceeds 65,000 vehicles. Outbound logistics accounted for another 15,000 units of the September deficit, due to shipping container shortages that forced postponement of export shipments despite efforts to utilize alternative ports in Gujarat and South India. The remaining shortfall of 5,000 to 7,000 units stemmed from higher-than-expected demand for 10 new models launched in the second quarter, with Sharma noting that "those models in the mix have shown very, very high levels of growth and we just simply ran out of the components."
Hero MotoCorp, Eicher Motors and other major auto stocks declined around 4% each, while Bosch, Ashok Leyland, Tata Motors Commercial Vehicles and TVS Motor Company also fell around 3% each. Among auto ancillaries, Unominda, Samvardhana Motherson International and Bharat Forge were down around 3% each, while Maruti Suzuki and Tata Motors PV slipped around 2% each. The new CAFE norms for passenger vehicles will tighten fleet average fuel-consumption benchmarks from 3.996 litres per 100 km in 2027-28 to 3.3273 litres per 100 km in 2031-32, representing a 16.7% improvement in fuel efficiency over the five-year period. The reference vehicle weight has also been increased from 1,082 kg to 1,229 kg, with automakers having multiple routes to meet requirements through ethanol-blended petrol, biofuels and compressed biogas.
Despite current sectoral weakness, brokerage firm Emkay Global remains constructive on the auto sector after expert interactions with multi-brand dealers. The discussion pointed to broad-based recovery in demand across commercial vehicles, passenger vehicles and two-wheelers, with such widespread growth not seen in more than a decade. Emkay expects the festive period to sustain this momentum, with Navratri and Dussehra falling in October, followed by Diwali in November. The brokerage believes the current upcycle could have structural support from longer replacement cycles and easing GST-related pressures. JM Financial expects dealers to build inventory ahead of the festive season, potentially supporting wholesale volumes and helping growth rates normalise against a high base. Within two-wheelers, JM Financial prefers TVS Motor Company, citing continued market-share gains, while Maruti Suzuki India remains its preferred PV pick supported by its launch pipeline and recovery in the entry-level segment. As per Wealth1 analysis, while auto sales data in September was a miss, there are expectations that numbers will improve in October and November ahead of Diwali and Dussehra celebrations. The expert noted that industry two-wheeler retail has been healthier than Bajaj's wholesale print, with Vahan registrations for Bajaj still up year-on-year, suggesting some channel destocking rather than total demand collapse.
